MPs grill Capita over pensions chaos

Yesterday, Capita appeared before a joint session of the Public Accounts Committee and the Public Administration and Constitutional Affairs Committee to give evidence on its mishandling of the civil service pensions scheme.

 

During this second hearing of the day, the Capita witnesses offered empty apologies, blamed their own faulty technology, stumbled over basic questions and claimed they were surprised by the complexity of the scheme, despite bidding for the contract.

 

But as PCS general secretary Fran Heathcote responded: “No amount of apologies from Capita’s executives will make up for the devastation they have caused to our members." 

After the hearings, she called on the government to "act urgently to end this costly failed experiment and insource now".

 

Taking a limited amount of accountability for this crisis, Adolfo Hernandez (Group CEO) Richard Holroyd (CEO of Capita Public Services), and Chris Clements (managing director of the pensions division of Capita Public Service) acknowledged that the scandal is having a “negative impact on our reputation and our ability to handle a contract like this”.

 

Responding to their claim that the scheme is uniquely complex, one MP countered that “surely you realised that when you submitted your bid for the tender”. 

 

And faced with a question about a scheme member who passed away at the weekend without having received any pension, Hernandez promised to resolve the most urgent cases, claiming “tremendous progress” over the past couple of weeks. “We’ve gone,” he said, “from a system in distress…to a system that has a backlog.”

 

This claim contradicted the first hearing of the day, when the Cabinet Office explained that it would be the end of July or August before there is a substantial reduction in the backlog.

 

During this earlier session, Nick Thomas-Symonds (the government’s paymaster general), Cat Little (permanent secretary to the Cabinet Office) and Angela MacDonald (deputy chief executive of HMRC and Cabinet Office recovery lead) explained how they were pressuring Capita and dropped hints that the scheme will be insourced - a key PCS demand.

 

Thomas-Symonds reminded MPs that Capita is failing to deliver on most Key Performance Indicators, and reiterated his recent comments that the scheme is a “prime candidate” for insourcing.

 

“Over the next few months our immediate focus is on executing robust commercial and operational pressure to clear the remaining backlogs and recover the service,” he said. “But for the longer term, I do think the episode has vividly exposed the severe limitations of outsourcing the civil service pension scheme.”

 

He also told the committees that he has “asked officials to look at the range of options” for the future of the scheme. Once it is "stabilised", he suggested, due consideration will be given to insourcing. 

 

“How are people dying, not receiving their quotes?” Catherine McKinnelly MP asked Cat Little and Nick Thomas-Symonds. Little admitted it is an unacceptable situation, suggesting that further payments could be withheld from Capita - to add to the £9.9 million that has already been withheld from the failing contractor.

 

To ensure any compensation for those affected isn’t delayed, MacDonald explained that she and her team were working with the Pension Ombudsman to expedite cases to prevent claims having to go all the way to the ombudsman, a process that could take years.

 

During the hearing, the government's chief commercial officer, Andrew Forzani, conceded that, under the current regulations, a “significant, sustained poor performance” can give the government legal reason to reconsider a provider like Capita for future contracts. 

 

When asked how Capita’s mishandling of the scheme did not fall under this description, Forzani could not give an answer and passed the buck to Little, who gave a vague answer about current contractual obligations. Indeed, at an earlier point, Little had stated that she couldn't commit to not handing Capita another contract.